Account Styling - Sole Proprietorship with a TIN

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Question:

What is the proper way to set up a sole proprietor account when the sole proprietor provides a TIN? Should it be set up as a DBA or simply under the business name?

Answer:

A sole proprietorship account should never be set up in the name of the business only, because the business isn't the owner of the account. Your account records need to reflect actual ownership, for FDIC insurance and a bunch of other reasons. I don't even recommend setting up a sole proprietorship account with an EIN. The IRS prefers that the owner's SSN be used. You also should use the SSN because when you're served with a tax levy or attachment naming the individual, you need to include the business account (it is an asset of the individual that is subject to levy and attachment). Also, in the event that you pay interest on the account, that interest should be reported under the owner's name and SSN. Finally, for name/number matching purposes, the IRS issues EINs to sole proprietors in their individual names, not in the names of their businesses.

First published on BankersOnline.com 11/10/08